Cameron to fly home as corruption storm builds

LONDON Tue Jul 19, 2011 1:31am IST

British Prime Minister David Cameron attends an event at the Johannesburg Stock Exchange July 18, 2011. REUTERS/Christopher Furlong/Pool

British Prime Minister David Cameron attends an event at the Johannesburg Stock Exchange July 18, 2011.

Credit: Reuters/Christopher Furlong/Pool

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LONDON (Reuters) - David Cameron cut short a trip to Africa and will fly home on Tuesday to defend himself from a scandal that has battered Rupert Murdoch's media empire, forced British police chiefs to resign and raised doubts about the prime minister's judgment.

As the head of Scotland Yard's counter-terrorism unit followed Britain's top policeman in quitting on Monday to fight corruption allegations, Cameron curtailed an already much abbreviated tour of Africa in order to attend an emergency debate on Wednesday in parliament, which delayed its recess.

Though he faces no challenge yet to his leadership, some of his Conservative supporters began to raise the possibility, albeit remote, that Cameron might face pressure to go himself.

He will be in Nigeria during a showdown in a parliamentary committee room on Tuesday when Murdoch himself, along with his son James and former top executive Rebekah Brooks, will face questions from lawmakers on what they knew when of payments by tabloid journalists to officers in the Metropolitan Police and of the hacking of voicemails of possibly thousands of people.

The Murdochs' management of their businesses was also being questioned by other investors. [nL3E7II023] News Corp (NWSA.O) shares were 4.5 percent down in New York. That was 17 percent lower than when news broke on July 4 that British police were investigating whether journalists in 2002 had hacked voicemail for a missing teenager who was later found murdered.

That has reignited a five-year-old scandal which once had seemed limited to spying on the rich, famous and powerful. Ten journalists have been arrested and released on bail.

In yet another twist to the story, police were quoted as saying that a former News of the World journalist who blew the whistle on illegal phone-hacking had been found dead.

The arrest on Sunday of the 43-year-old Brooks, a personal friend of Cameron and former editor of the News of the World, and the resignation of Metropolitan Police commissioner Paul Stephenson, left Cameron looking exposed in defending his own conduct in an affair that has triggered public outrage at cosy relations among the elites of the press, politics and police.

CAMERON ON DEFENSIVE

Starting his visit to South Africa on Monday, Cameron was again forced to defend his appointment of Andy Coulson as his spokesman, just months after Coulson resigned as editor of the News of the World following the jailing in 2007 of one of his reporters for hacking the phones of aides to Prince William.

Labour opposition leader Ed Miliband, whose party has long competed with the Conservatives for Murdoch's favour, stopped short of suggesting Cameron should quit -- he said he wanted details, among other things, of discussions he may have had with U.S.-based News Corp about its bid for broadcaster BSkyB, finally dropped amid political hostility last week.

"He's got to come clean," said Miliband.

Less tempered, Labour left-winger Dennis Skinner demanded: "When is 'Dodgy Dave' going to do the decent thing and resign?"

Stephenson had put Cameron on the spot in unusually barbed remarks in his resignation speech. The police chief noted that while he was quitting over the appointment of Coulson's former deputy Neil Wallis as a consultant to London's police force, Cameron did not follow suit over his hiring of Coulson himself.

Moreover, Stephenson said, Wallis was a less tainted figure than Coulson: "Unlike Mr. Coulson, Mr. Wallis had not resigned from News of the World or, to the best of my knowledge, been in any way associated with the original phone-hacking investigation," the outgoing commissioner said.

As a result, Cameron found himself on the defensive at his first news conference in South Africa: "I don't believe the two situations are the same in any shape or form," he said.

"There is a contrast with the situation at the Metropolitan Police, where clearly the issues have been around whether or not the investigation is being pursued properly."

POLICE UNDER FIRE

Police are under pressure for failing to probe more widely after the jailing of the News of the World reporter in 2007.

The officer responsible for a decision in 2009 that there was insufficient evidence to reopen inquires was savaged by a parliamentary committee last week. When told on Monday he was to be suspended, counter-terrorism chief John Yates chose to resign. He vowed to clear his name of corruption allegations.

In January of this year, after reports in rival media that phone-hacking was much more widespread at the News of the World and campaigns by aggrieved celebrities and politicians, police launched a new investigation and Coulson left Cameron's office.

Police have since said that the notes of an investigator jailed in 2007 for his work for the News of the World include the names of nearly 4,000 people who may have been spied on, including child crime victims and the parents of dead soldiers.

One of the sources for early newspaper stories on the affair was former News of the World reporter Sean Hoare. British media said he was found dead at his home on Monday, but police did not believe the death was suspicious.

TEST FOR CAMERON

Cameron, a 44-year-old former public relations executive, revived Conservative fortunes after taking the leadership in 2005, winning power last year after 13 years of Labour rule.

Many see the scandal as his biggest test to date, with some senior colleagues willing to step up if he becomes a liability.

His deputy prime minister Nick Clegg, leader of coalition partners the Liberal Democrats, rubbished any such talk. Asked whether Cameron might be forced out over the scandal, Clegg replied: "Of course not. Let's keep some perspective."

Helen Cleary, head of political research for pollster Ipsos Mori, said that so far the scandal had limited implications for electoral politics, given both major parties' links to Murdoch:

"It's not necessarily something we would expect to have a huge impact on voting intentions -- particularly because at the end of the day it involves both main parties," she said.

In parliament on Monday, Conservatives reminded Miliband that he too hired a former Murdoch journalist as an adviser.

Mark Field, a backbench Conservative, said the effects of the scandal went back to Labour's time in power and would erode trust in all politicians: "The fact that elite politicians from both parties were doing their best to ingratiate themselves to a range of people who, I suspect ... are going to end up in prison, will not reflect well.

"It has an insidious effect on the trust that you have for all institutions ... That trust is being corroded."

Some commentators said Cameron's personal troubles were not over, especially if his own supporters questioned his judgment:

Iain Dale, a prominent Conservative commentator, wrote on his blog on Monday: "I can't believe I am even writing this, but it is no longer an impossibility to imagine this scandal bringing down the prime minister, or even the government."

Yet, he said, that remained far-fetched, as did Toby Young, a commentator blogging at the Conservative-supporting Daily Telegraph, who cited Cameron's assured demeanour in public and efforts to highlight Labour's own long relationship with the Murdoch press as reasons for expecting the crisis to blow over.

"I don't rule out the prime minister being toppled by this scandal," Young wrote, citing the risk of a "palace coup". "I just don't think any of the details that have emerged so far, or his handling of the crisis, put him in serious jeopardy."

MURDOCHS UNDER FIRE

The affair prompted Murdoch to shut down the 168-year-old News of the World, Britain's top-selling Sunday paper, and to drop a bid for highly profitable BSkyB that was a key part of News Corp's global expansion in television. That in turn has raised questions from investors over the family's management.

"People would rather be cautious and mark it down rather than find a reason to defend it," said Jackson Leung at News Corp shareholder Invesco of the company's sliding share price.

Thirty-eight year-old James Murdoch, the heir apparent, is the executive most in the firing line, many analysts believe, following the resignations on Friday of Brooks and of her former colleague in London Les Hinton, head of Murdoch's Dow Jones & Co, publisher of the Wall Street Journal.

Some shareholders at BSkyB said James Murdoch may have to step aside as chairman. Some analysts said that could pave the way for News Corp chief operating officer Chase Carey to step in and succeed Rupert Murdoch as overall head of the group.

Murdoch published apologies in several rival newspapers at the weekend. He also apologised in person to the parents of the murdered schoolgirl whose phone was hacked.

On Monday, the company set up an independent ethics committee under Anthony Grabiner, a commercial lawyer and member of the upper chamber of parliament, the House of Lords.

(Additional reporting by Jodie Ginsberg in Pretoria and Stephen Mangan, Christina Fincher, Sven Egenter, Mohammed Abbas, Michael Holden and Avril Ormsby in London; Writing by Alastair Macdonald; Editing by Myra MacDonald)

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